Ontario Passes TRALA-Supported Vicarious Liability Reform

Legislation limiting vicarious liability for owners of rented and leased vehicles pushed by TRALA and its Industry Council for Vehicle Renting and Leasing was approved by the Ontario Legislature on Wednesday, December 14. The legislation limits the vicarious liability exposure of long-term and short-term vehicle lessors to $1 million, less any amount recovered from the lessee. The legislation also amends Ontario’s statutory priority of payment requirements making the lessor’s insurance secondary to the lessee’s insurance.

“Ontario clearly watched the dramatic developments in the United States culminating in the nationwide repeal of vicarious liability in August 2005. We took this opportunity to work with our Canadian allies in building upon that success to end this discriminatory practice in Ontario,” said TRALA President and CEO Peter Vroom.

Canada’s action follows the August 10, 2005 enactment of TRALA-sought federal legislation eliminating vicarious liability in the United States. The new law took effect immediately and will save the vehicle renting and leasing industry and its customers billions of dollars through savings in unfair liability awards, attorney’s fees, and supplemental insurance premiums. This legislation also opened or re-opened markets previously avoided by vehicle lessors because of the threat of liability without fault.

An unprecedented November 2004 vicarious liability settlement of $12.8 million against Primus Automotive Financial Services for an accident in Ontario heightened the concern of lessors within the Province. Following the announcement of this settlement, TRALA immediately began working in Ontario with the Associated Canadian Car Rental Operators (ACCRO) and the Canadian Finance and Leasing Association (CFLA) to build support and raise the funds necessary for the legislative effort. In addition, the success of the TRALA-led effort to eliminate lessor vicarious liability in the United States provided inspiration for Ontario to reform its unlimited vicarious liability law.

The vicarious liability reform provisions were passed as part of a larger Ontario budget bill. The bill was enacted into law through Royal Assent on December 15. The vicarious liability provisions will be implemented following a phase-in period of about three months. During these three months, TRALA and its representatives will be working with its industry allies and the Financial Services Commissions of Ontario (FSCO) to incorporate the new law into Ontario’s insurance regulations and forms.

TRALA, based in Alexandria, VA, is a voluntary, non-profit trade association, organized in 1978 to provide a unified and focused voice for the truck renting and leasing industry. TRALA's membership includes more than 500 leasing and rental firms and 100 suppliers that make up nearly the entire truck renting and leasing industry. The renting and leasing industry is annually responsible for approximately 35 percent of all new Class 3 through 8 commercial truck registrations.

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